Chart of the Day - Wednesday, June 17th, 2020

Today’s Chart of the Day was shared on Twitter by Ryan Detrick (@RyanDetrick). The chart shows the amount of money market mutual fund assets over the past 15 years, along with the three-month rate of change in yellow. Ryan points out that there has been a record spike in the amount of cash on the sidelines over the past three months. There is nearly $5 trillion dollars in money markets, which is nearly double what it was 5 years ago. The recent surge in retail trading activity and the rise of newly minted day trading gurus has many concerned that stocks are entering another dot-com type of bubble. But what if the real bubble is in the amount of cash on the sidelines? Sure, a lot of this is a result of massive fiscal stimulus and future uncertainty. But what if the world doesn't end, and the markets continue higher? In such a case, it wouldn't be surprising to see investors put some of this cash to work in the markets. Will this be the dry powder needed to fuel another leg higher or a sign of risk aversion?